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tv   Mad Money  CNBC  June 21, 2022 6:00pm-7:00pm EDT

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>> dan nathan. >> we spent some time trying to read the tea leaves. look at this, relative underperformance of bank are saying something >> thanks for watching fast. don't go anywhere. my mission is simple, to make you money. i'm here to level the playing field for all investors, and i promise to help you find it. mad money starts now. >> hey, i'm kramer. just trying to make you a little money. my job is not just entertainment.
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maybe everything is still too high. every time i think prices for everything have started to go lower, including stock prices, like we saw last week when they plummeted -- yes, it strikes me that the fed still have a ton of work to do if we are going to get inflation under control. make no mistake, that is the only way this bear market truly comes to an end. the average bear market lasts roughly 180 days. we are at day 190. remember, although, it didn't really get serious until this year. it makes you want to believe today's major trend is not a minor court. until the fed makes more progress, i don't believe the decline is over.
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you need to lighten up on days like today. what needs to go down more? our government's approach to pushing down the price is totally unserious. the white house has -- they don't want new pipelines, but they also want to get energy inflation under control. these high asoline prices are lethal to getting re-elected. even without doing anything else, biden could suspend the jones act. right now, most of the fleet is foreign. instead, we hear about a tax holiday for gasoline. petroleum reserves, tiny attempts to deal with a much bigger problem. sometimes, i wish they would just call me in so i could tell them the oil industry is not the end. they want a lot of what biden wants, but they don't know how
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to add, and he doesn't know how to tell. can biden never sit down with americans, or can he only sit down with saudi's? another reason why inflation is so ingrained, take the news from home building giant, lennar, this morning. so far, so good. in our highlights, one of the strongest housing markets in the country for the last two years, in seattle. listen to this. low inventory remains extremely strong. buyers have pushed back for a reset and pricing. so far, so good, right? buyers are saying no. they go on, the higher pricing in locations around seattle have seen a significant pullback in sales in may and early june.
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wow, that is terrific from an inflation perspective. they continue. this pullback is a result of continued price appreciation. it is causing concern over home values being overpriced, and stock market crashes, which have a direct impact on employees stock compensation plans. not to mention, higher interest rates. high interest rates, low stock market, they are doing their job. it is all good for the fed, so far. except, one problem. after all that negativity, once again, in this market, we are at prices that are still significantly higher than the year before. higher. after that higher rate, declining stock prices, lower price adjustments, we still have not popped the bubble. so, in other words, all this stuff that i read that made me feel like, you know what doctor
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we are going to be seeing a top in interest rates sometimes in. there is good news in this report. there are a lot of rich towns where lennar is building. i was out west in silicon valley. the ones that were mentioned, atlanta, charleston, nashville, reno. this pattern is consistent with what lennar is saying. why are these tech companies moving? there simply aren't enough engineers in silicon valley, so wage inflation is nuts. there are so many potential employers. they have all the leverage. they would rather move to new cities where there are fewer potential employers, and people can't job hop as easily. job hop, remember that term, that is wage inflation. the tech industry is finally
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doing something about it. it's walking. the first mass layoffs will be in silicon valley, as larger companies migrate to cheaper locations, and all companies struggle to raise money. things aren't totally stagnant. take kellogg today. like many companies you will see, kellogg got fed up with their slow stock price. they didn't feel like they could do anything, so they decided to break up into three companies, a global snack, international breakfast, and north american and caribbean cereal, and a plant-based foods play. i am all in for this. there are strong demand for each of these products. there is a ton of snack demand, including a love of pringles. which, i insist is real food. my kids vehemently disagree with that.
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the more i dug into it, the more i realize that people like it, mainly, because the company has been able to move their big price increases. the food shortage has forced companies to pass their cost increases to the consumer, and that is very bad news for the fed. you need food prices to be rolled back. it's not going to happen. hey, they know, they are the food companies. by the way, i do like the kellogg breakup. when you put them altogether, i think the plant-based spinoff will get acquired by any food player. mostly, i like it because it can put through all the price increases it wants, because kellogg has such a good brand name. from the fed perspective, i argued that the stock market is the most attractive piece of all. i don't like it, but if powell wants to be inflation, he needs stocks to keep going lower, not higher like today. the wealth effect is so potent. in recent years, bountiful gains in the stock market have
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allowed the winners to spend like crazy. if powell can get the market to go down and stay down, then the rich are less likely to spend aggressively. a lot of people are more likely to remain in the workforce, when they might have otherwise retired. this market, it just refuses to roll down. a total of front to what jerome powell wants. you have a portfolio, and i want you to make money. i know that this has to happen before powell can declare victory. right now, the best outcome would be for the averages to come down quickly so we can just get it over with. powell is probably hoping today's action is just another temporary spike. the bottom line, powell had better hope this run won't last, unless those beach house prices, new construction jobs, lennar homes, and oil prices will be going down and staying down anytime soon. let's go to stacy in north carolina. stacy.
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how are you? >> good. long time listener, first-time caller the ticker is u.p.s. is it a good time to buy? >> the stock has come down quite a deal. the answer is, stacy, yes. 3.48 yield, contract, 13 times earnings, call me a buyer. all right, powell better hope this run won't last, unless those beach house prices, new construction jobs, and lennar homes, and processed food stocks, and oil won't be going down and staying down anytime soon. he needs that. let's get it over with. you called in and asked me about foods, and i invited a ceo to join us. i'm sitting down with the top
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brass to make sense of the recent action of the stock. i'm taking a bite of sweet greed, to make sense of how wall street is doing. plus, one of the hottest sectors in the economy. we sit down with david faber to discuss what he learned in his upcoming documentary on exxon. stay with cramer.
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what do we do now that everybody is worried about a recession? a dominant player in the retirement industry, just over a month ago, the headline numbers were excellent, but that operating cash flow numbe , it came in much lower than we expected and really tanked the stock. wall street took a glass half empty approach to the quarter. since then, it has kept drifting lower. less than a dollar above its 52 week low. this tells e that money managers have confidence in those numbers. they are too worried about the consequences of this federal mandated recession we talked about. we've got the mother of all car shortages right now, so even if
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demand falls off, it does not mean that goodyear will take the hit. let's check in with rich kramer, no relation. let's get a better sense of where the company is headed. welcome back to mad money. >> thank you, jim. thank you for having me. >> before we get to the numbers, i have in front of me a 70% sustainable material tire. if you asked my kids, and pretty much any one of the younger generation, what is the thing they hate the most, it is miles high tire piles. this could be the end of that. correct? >> jim, you are absolutely right. i have to tell you, like your kids, as a company, we are so proud of that tire, in particular, and the progress we made to get the 70% sustainable on our way to 100%. that is our goal by 2030. really, focusing on the environment is something that our team here at goodyear is so energized about. >> now, let me ask you, is
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there any reason to believe that you are a technology company? >> no. absolutely not. that tire that you have there is not in production yet. that is a prototype that we put together, ut we have had that on the road. it has the performance requirements. it will have all of the safety and writing handling expectations that you would expect from goodyear. they will be there. >> if i were a ford or gm, i would say i have to put orders in here, richard, because there are going to be younger people who will ask for this. that is what the new generation is about. >> jim, i agree with you, and as we think about scope one, scope two, scope three, and how good your to help our customers, i think this is an excellent example of how we plan on doing that. >> i know that mark talked about your relationship. it seemed like it is bearing a lot of fruit.
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that is a long-term thing, but what can goodyear do with its sales force? >> well, but, mark is a great guy. he was very kind. jim, we are, in the end, a customer and consumer focused business. the tools that salesforce brings to us helps us understand what our customers want, and how we can design products, solutions, and business models, whether they are individual or fleet, how we can help them succeed. that is what those tools do for us, by helping us get those insights that allow us to compete better than those that we compete within the market place. >> would that be, specifically, to truckers? car owners? who are you appealing to? >> jim, all of the above. as you know, we sell to be original equipment makers, but we also sell to individual consumers, in trying to understand what they need, where they need it. understanding what those
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consumer wants -- that is what those tools help us do. and, to your point, jim, we are the biggest fleet provider for tires out there for the big trucking companies. we focus on cost per mile for them. we do it with about 2500 truck service centers around the u.s., and we do it with a set of digital tools that are increasingly allowing us to be proactive, to tell them when those maintenance items are going to happen, before they do and have breakdowns on the road. all these tools help us to be a better supplier and solutions provider for our customers. >> let's go back to the numbers. the top line, everything looked great, then i saw the operating cash flow. was that just telegraphing, because it did take my breath away? i said, oh my, they are going to hit the stop. i really believe, because i love the merger, was that something that was, if it had been telegraphed, would not hurt the stock so badly? >> it is interesting, because i have to say, business was strong
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, it remains strong. mobility is up. as you know, vehicle miles traveled are up. travel is set to be at record highs on the road again, all of which benefits us. i will tell you, on the cash flow side, really, we did have a usage in q1. in our industry, q1 is always negative. it follows a really strong fourth quarter of collections and sellout. we always produce more than we sell as we build inventory clearly, we have have the price impact in there. even raw materials and inventory. then, we have the added impact of cooper, who also has that same sort of cyclical nature, and then, add to that, we did say this ahead of time in our fourth quarter call, that we were going to rebuild inventory post-covid, because as you know, like many industries, our
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inventory was much lower than normal, so we had about a $200 million inventory phil for rebuilding inventory. we did telegraph that was going to happen. >> everybody has to cover their costs. you have to cover your costs. is there going to be price resistance at a certain point? do you have to continue to raise prices just to be able to meet the raw costs, which i know are not your fault? they keep going up. >> yeah, i think, jim, that is been the case. i think we demonstrated in q4, as we said we would, an ability to get ahead of raw materials. those costs continue to move u , and as evidenced by in the u.s., an announced price increase on june 1st. we do have to go out there and make sure we can recover those increasing costs. having said that, jim, like every product, as you know, and listen, i've been through five cycles of these already. there is always a point that
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diminished demand comes into play. i would also tell you, there are a few things different this time. clearly, the placement demand may go down. we are better positioned with cooper to deal with any movement of volume from premium down to value brands. that is number one. number two, and you know this, times in the past, really, the demand has not come back yet. so, we see, even in the down environment, only demand is going to continue to increase. that may give us some cushion, should we hit that recession that everyone is talking about. >> look, we don't want the recession, but we know that we want prices down. businesses have to make money, or else they can't employ people. i want to thank rich cramer. good to see you. >> thank you, jim. thank you for having me. >> of course. back after the break
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we may not know just what lies ahead, but it's only human... to search for it. we have reached the point in this bear market, where the analysts are being forced to reckon with the fact that the price targets they have for many stocks are just way too high. that's why we see a ton of price target cuts lately. we need this to happen if you are ever going to put in a bottom. even if it is that kind of bottom. not all price targets are created equal. it is important to be able to tell the difference. this happens all the time. we talk about this constantly.
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there is what we call a trim, where an analyst will cut a price target that comes high, down to a level that is there well above where the stock is trading. stocks have come down so much, or they have a ton of conviction in the underlying story, so they are only trimming the price targets, because the old ones are impossible to justify. then, you have the deeper cuts. these are really something. they mean that you are about to experience something really nasty. the analyst takes the price target down to a more level in line, acknowledging things have changed. finally, oh my god. they often take the rating to neutral itself. this is the most negative, although, at this point, you have to wonder about the timing.
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downgrades six months ago. sometimes, you will see the full spectrum on display in a single stock that is visible and understandable. that is what we will see tonight. we will talk about sweet greed, right before the ipo window slammed shut. at least, they got it done. an intraday high of 66, which i told you not to chase. did you hear that? 56 to 11 in change. they are relentless. i can't blame anyone for turning against us. it is an improbable growth story in an environment where wall street has no respect for growth. i told you to avoid the stock. i told you again to avoid it in december. nothing that has happened in the last six months has made me change my mind.
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$11 does not fetch a buy from me. recently, the stock got hit with two target cuts. last wednesday, andrew charles cut his price target from 28 to 22. that is what i call a trim, given that the stock was trading at $13 of the time. john tower cut his price target and half from 32 to 16. that feels a lot more realistic to me. i will walk you through these dueling price target cuts, because they can teach you a great deal about how the analysts are approaching stocks in this environment. it will let you know whether something is phony or not. let's talk about sweet green itself. this could have been a truly beloved stock. they are all about giving people healthier food that is locally sourced. they have a great digital platform. i've got three of them near me.
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they came public right before unprofitable growth stories went out of style in the wall street fashion show. they are also losing lots of money. it is the kind of stock that has been abandoned by the market. don't touch something like sweet green when inflation is rampant. their salads are really expensive. you could get away with $15 for a salad in the old days. sure enough, sweet green stock has been obliterated, down 65% from last december. down nearly 80% from its peak. anyone who has bet on this thing has had their guts ripped out. they bought it, by the way, because they like to eat there. that is not a reason to own a stock. that brings me to these dueling price target cuts. last wednesday, they kept
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outperforming on sweet green. even naming one of the stocks -- i don't know what a bad idea looks like. to be fair, they see sweet green as a covid recovery play, with people coming back to the cities. there is a lot less produce inflation, which might make their salads more enticing on a cost front. the two structural restaurant megatrends, to which i say, you could've made the same argument a year ago. it has not worked out well for sweet green shareholders. you can feel the frustration. hey, if this were june of 2021, the bulls would be right. they would have a great argument. but, the market has changed in the last year, and it is harder
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for sweet green to get any love in this new environment. it almost read like a rebuttal, frankly. even though they left the rating neutral, they cut the price target in half from 32 to 16, as part of a broader set of number cuts for restaurant chains. they own most of their locations, rather than franchising them. inflation is going to do a number on these cut companies. specifically, this is a long term growth story in a time of rapid inflation. high inflation arose the value of those future dollars, same reason all unprofitable growth stocks in every industry -- it doesn't matter, they have all been annihilated. more specifically, citi is investing heavily to grow its business right now. more free cash flow. this could be real trouble.
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it is restaurant demand. even with these negatives in mind, citi only cut the price to $16. my view. when you see something like that price target trim, understand that it is not theirs. it is wall street digging in its heels. i think citi's aggressive price target cut is a lot more realistic. in the end, this is a bear market not a bull market. we had a bull rally within a bear market. right now, wall street loves earnings, cash flow, dividends. sweet green has none of those things. that is a recipe for total destruction, even though i like the place. then again, i am no longer the key demographic. david in south dakota, david?
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>> jim, how are you? >> i'm well, how are you? >> i'm great. thank you for all you do. i am a first time investor this year, so i have not made a lot of money, but you have saved me a lot of money, so thank you. >> i'm so glad you are involved. let's be cautious, it is not a great market. we are going to be saying, why did we not buy stocks, so let's go to work. >> yes, sir. i have a stock with a dividend of 2.5 from its pre-pandemic price. it is texas roadhouse. >> it's a really good company. they did lose, tragically, their fantastic founder and ceo. it is still a 17 times earnings, a little too high for me. i know it sounds like i am splitting hairs. take that down to 15 times earnings, and i will tell you, that is where i will buy it.
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let's go to norman in california. norman. >> longtime listener, first- time caller. >> thank you. what's going on? >> what do you think of my stock, jack-in-the-box? >> jack-in-the-box, in the old days, before interest rates shot higher, a 3% yield would protect you. now, even a 5% yield does not protect you, as i saw from american eagle outfitters. i thought it would be safe with a high yield. it is not helping. i have to say the same thing about jack in the box. okay, in a bear market, you do not stick your neck out. even though the company or the product is great, sweet green has none of the things that this market loves. you are fighting the fed and the tape if you try to buy this one. it could go up a couple bucks. i'm sitting down with david faber, and the release of his
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amazing exxon documentary airing tomorrow. you have to see his takeaways. then, the russian ukraine war has certainly hurt our economy. tonight's edition of the lightning round, so stay with cramer. another crazy day? of course—you're a cio in 2022. but you're ready. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want —your team, ours or a mix of both. with the nation's largest ip network. from the most innovative company. bring on today with comcast business. powering possibilities.™ (torstein vo) when you really philosophize about it,
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this is so good. this is a clip from exxon mobil at the crossroads. arguably, the best business journalist we have out there entirely. this is a crazy time to be in the oil and gas business suddenly, the fossil fuel industry does not care about going green. when russia invaded ukraine, the price of oil and gas went through the roof. many of the politicians who used to worry about the environment want the industry to pump more oil. you can hear about all these challenges when david's
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documentary airs tomorrow night. don't take it for me, let's go straight to the source, the man i am proud to call my partner, david, welcome to mad money. >> thanks. it is a little weird to be here. not where we usually are, the new york stock exchange. >> i said to myself, how could a company that john rockefeller founded, the most corporate leased intouch company on earth, lose? >> they lost. >> first of all, there are so many different elements. the mandate for many of the big index funds, which control so much of the vote. if one went, many of the others had to follow. there was a lot of pent up anger, amongst their shareholder base. a lack of transparency through the years that resulted in that vote, that incredibly surprising result.
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listen, i have lots of angst for it, because it is the reason, i think, in many ways, was how we were able to get access that we would've never had previously. >> you were talking to the most powerful person in the oil business, and he asked you if he is a believer, is he a liar? >> we did not ask him if he is a liar. >> no, but we will play at tape in a second, which makes me wonder if they are climate deniers. >> best part of this. there are two things we tried to do here. we tried to show people what exxon mobil is about. perhaps, the most relevant corporation in the world for the longest period of time. nobody knows much about it, from john rockefeller on. >> you were never supposed to know. that was the whole point of rockefeller. no one was supposed to know. matt. >> by the way, that culture continues. we are the beneficiaries of that.
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people that watch this documentary will see exxon mobil up close, for what is the first time. then, we tried to answer this big question, are they serious about combating climate change? are they serious about getting their carbon footprint down? >> we have a great clip that will tell you the seriousness of how you approached this. >> it matters in what the culture of that company is. is the company going to still hunker down and do everything possible to make maximum profits without tackling climate, or have they really turned a corner? have they really gotten some religion? >> do you think you pay a price, not throwing your predecessor overboard, for lack of a better term? or, somehow meeting the objections that some of these legislators have? >> i would say, judged on the work we are doing, and what we are doing going forward. we have to focus on how we will
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address this problem. we are doing work today in advancing very large-scale projects. we are engaged with governments all around the world. at the same time, providing reliable and affordable energy is so critical to standards of living all around the world. >> really? >> i'm going to let people judge for themselves, based on the questions we asked and the answers we got. from the critics of the company, as well, jim. people will be able to form their own opinion. >> one of the things people forget, is they are a great american company. you got to go to guyana, which is a remarkable place, because of how we frack in the west. frack does not last. >> i think you're right. i know you are right, because we sought a close, how good exxon mobil is at what they do. you and i sit every morning together and talk about
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technology companies, yet, we never think about these kinds of companies as technology companies, but they are. of course, they are. vertical, two miles. horizontal, two miles. then, meet in the middle. how did they even do it? >> we have to watch it. i don't care if we are running late. just put this clip of guyana up. >> what is happening with this equipment? >> i bring it up from the reservoir, and within that, we separate the oil to put onto the tankers to sell around the world. we recompress. >> at 340 meters long, roughly the length of a football field, the fps i'll have the capacity to hold up to 2 million barrels of oil, which it offloads to
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tankers for transport. >> it will get us up to full production. >> what is full production capacity for this facility? >> about 220 k bd. that is usually the average for the year. on any given day, we can go higher, 230. depending on the conditions, we can go higher than that. >> is it insignificant? >> now. people will see. we saw so many of the different wells. that is exxon mobil. you thought there, what they are able to do. by the way, as you know, that spot, there was oil outside guyana, but they weren't sure. a lot of companies didn't get there. >> i know of the companies that gave up. you didn't give up. this is remarkable.
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i have to tell you, all the companies that i thought no one could ever get into, it is exxon mobil. great job, partner. exxon mobil at the crossroads premiers tomorrow night at 8:00 p.m., that's eastern. wow. i can't wait to see it. >> coming up next, cramer is bringing the thunder and answering your burning questions in today's edition of, the lightning round.
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lightning round is sponsored by td ameritrade >> before we get to the lightning round, i want to tell
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you about an exciting interview we will have tomorrow on mad money. i'm sitting down with the one and only, mark zuckerberg, ceo of meta. we will talk about the old facebook, to whether he will be soon taking your meetings in the metaverse. you don't want to miss this one. now, it is time for the lightning round. are you ready? deepak, what do you think about long-term and short-term? short term, the stock is too low, given the fact that people are traveling. josh in indiana, josh? >> hello, sir. a quick shout out to all my friends and family with the tickertape, i know they are watching the show. >> i love them. what's up? >> i have a good one for you.
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they have a clean shop, always stocked. >> don't get greedy! let's go to john in texas. john? >> hey jim, i love your show. there is something i want to ask you about. they have a 9 1/2% growth, in 2019, they did cut the dividend, but i'm curious to get your thoughts about lumen technologies? >> don't trust. don't trust. things are going to go right. i will have to say no to that one. david in georgia, david? >> hey, jim, how are you? >> arbitrating the stock -- >> we are not going to recommend that.
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they are very, very low. that is what we think about. devon, in new york. devon? >> hey jim, what is going on? >> not bad. >> my question is about mp materials -- >> these are rare earth materials. the company has done a good job. we've had them on a bunch of times, and i do like them. let's go to larry in louisiana. larry? >> hello, jim, i appreciate you taking my call. >> the best team in the business. what's up? >> i'm a club member, and i've been following you. >> i love it. >> i'm interested in your thoughts on a stock that is underperforming this year, the ticker is trow. >> that happens to be an
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excellent company, that happens to be very well-run. that is the conclusion of the lightning round. >> the lightning round is sponsored by td ameritrade. coming up, the prudent tax on oil is sending the economy higher. what is the real threat? cramer explained, next. thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading.
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everyone knows that the war in ukraine has done immense damage to the global economy. president biden talks about the tax on our oil. when you consider the stock market, the real prophet killer right now is china, not russia. let me put it this way, apple gets almost 19% of its sales from china. we have no idea how they are doing under the lockdowns imposed by the government. we know apple is taking share in the chinese market.
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as i read over the research, it became clear, if china remains shut down, apple is going to have an even larger pool than the $4 billion-$8 million profit we talked about. that is a problem. apple is a $2 trillion company. it used to trade at a discount on the s&p 500. because of accessories like the watch, and crypto services, you have real diversification that could justify a higher multiple. however, if the lockdowns in china hit the brakes on apple's revenue growth, it would surprise analysts who downgrade the stock. it is already fallen from 180 down to 30. it will be worth buying after the next round of downgrades. own it, or just hold it. it is not just apple.
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they get roughly 20% of their revenue from china, so is this catastrophic? maybe it is only down 5%. the chinese weakness has already knocked the stock down from $179-$108. this thing jumped 150 points. if they have not taken that much of a hit, nike can revisit its old highs. how about starbucks? like the others, it is ongoing business away from the lockdown cities. starbucks has more than 5000 stores in china, and the greatest growth comes from putting up new locations in tier 2, and tier 3 cities. these are likely to be shut down as part of the covid initiatives that the chinese have. any good news from the chinese companies can really turn things around. don't get me started on the
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lockdowns on both the supply side and demand-side. micron sold very few chips there. amd has similar exposure. people are not ready for it, although i think the company is doing really well. then, there is qualcomm, who we had him last week. a lot more exposure to europe than america. general motors, 600,000 cars in china in the first quarter of the year. i bet they are doing a lot worse in the second quarter. of course, the chinese government remains an enigma. they could easily import vaccines from the west, and it would make a huge difference for them. i think the current situation is untenable. the moment china gets like the
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rest of the world and ends the lockdowns, these stocks will be the buys and this entire market. in the meantime, the second quarter ends in 10 days. if you don't on them already, at this point, you might want to wait although, they have come down to levels where the risk reward is, very much now, in the


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